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Successful companies create meaningful value for end users rewarding their shareholders with value creation through profitable sales growth. While this is a simple relationship, understanding end user needs and delivering solutions that consumers are willing to pay for is a much more complicated task. Traditionally, product manufacturers could do good end user insight, deliver a reliable product, and generally be successful in creating value. But the rules of the marketplace are evolving. Product companies are adding software services as key value creators. Service companies are adding products to complement their offerings. Academic researchers and authors have characterized this as value creation moving from products or services by themselves to ecosystems of products, services and partnerships. My employer, Chamberlain Group, experienced this transition in marketplace value creation first hand starting with the introduction of myQ connectivity platform in 2011.
"Agile development demands deep, daily engagement of the product owner with the technical development team"
One of the key learnings in our evolution from a ‘consumer and commercial durable product manufacturer’ to an ‘ecosystem participant and leader’ has been that a company’s processes and tools of innovation have to change to continue to win in the marketplace. Like most consumer durables companies, Chamberlain drove growth through new product development using a traditional stage gate process. Stage gate allowed Chamberlain to manage the execution risk of resource and capital-intensive development of stand-alone physical products. As our products became connected, we were challenged with understanding consumer expectations/insights around combined products and services, then managing our product development and lifecycle management processes to match these new expectations. First, we had to complement our stage gate expertise with agile development capabilities for our software services. Then we realized moving from products to ecosystems changed the way we think about getting paid for the value we create, which represents business model innovation challenges. To address business model change we adopted the lean start-up toolset which allows us to manage uncertainty and learning risk instead of execution risk.
Management complexity increased significantly for the Chamberlain leadership team as a result of adding these additional innovation toolsets. The appropriate level of oversight and the questions to ask vary for each toolset. In stage gate projects, you generally fix scope, and manage cost and time within appropriate bounds. In agile development projects you generally fix time and cost, and manage scope within acceptable bounds. In the lean start-up toolset, you structure your investments around reducing uncertainty and managing learning. We found that creating a portfolio approach to innovation investments allowed us to better understand which toolsets would provide the right level of oversight for these different types of growth opportunities. We organized our projects into incremental core innovation opportunities that typically are product based and use our stage gate toolset, core adjacency innovation opportunities that are typically driven by software services and use our agile development toolset, and business model innovation opportunities that use a version of the lean startup toolset adapted to our culture. Our stage gate projects are the most capital and resource intensive and have the heaviest oversight. Our lean startup projects supporting business model innovation have the smallest capital and resource demands, and require a lighter level of oversight to maintain the flexibility to learn and adapt. Oversight on the agile projects is somewhere between these extremes.
As we matured in our execution of the agile tool set, we gained additional benefit by implementing aspects of agile development within our traditional stage gate process to drive efficiency and effectiveness. The implementation of use cases, user stories and daily scrum meetings have driven down development cycle time as technical development issues or misalignments with use cases are identified quickly and addressed before significant resources are wasted on non-value-added activities. The shift to developing via sprints, with the associated testing of small iterations of development and demonstration of incremental features, has led to much better alignment between the marketing and technical organizations through the development phases.
Some aspects of agile and lean start-up have been challenging to implement within Chamberlain’s strong consumer durables/ consumer products culture. The concept of MVP (minimum viable product) has been a particularly difficult concept to align with the traditional consumer durables culture. MVP in the lean start-up sense can be interpreted by traditional product marketers as being in direct conflict with building the brand and satisfying the customer. Developing product owners has also been challenging. Agile development demands deep, daily engagement of the product owner with the technical development team. While Chamberlain has successfully used cross functional product development teams for almost 20 years, the level of engagement and responsibility by the product owner is much greater in agile. This has led to challenges around work load and capacity as product managers attempt to balance their traditional job responsibilities with the added work load of being an effective product owner in an agile environment.
We are still on the journey from durables manufacturer to ecosystem leader, but we have made much progress and we have derived many benefits from expanding our innovation toolset.